1. What is the purpose of the Buyer’s Homeowners Insurance Advisory?

It informs the buyer that obtaining homeowners insurance is their responsibility and should be done early in the process. It also explains that insurance availability, cost, and coverage can vary depending on the property’s location, condition, and other factors.

  1. When should a buyer start looking for homeowners insurance?

As soon as an offer is accepted—or even before—so they can confirm the property is insurable and determine the cost. Delays could cause closing problems if insurance can’t be secured in time.

  1. Can a property be uninsurable?

Yes. Properties with prior claims, poor condition, certain location risks (like flood or wildfire zones), or outdated systems (such as old electrical or roofing) may be denied coverage or face extremely high premiums.

  1. How does insurance affect the loan process?

Lenders typically require proof of insurance before funding the loan. If the buyer cannot obtain coverage, the lender may refuse to close, delaying or cancelling the transaction.

  1. Does the location impact insurance premiums?

Absolutely. Homes in high fire risk zones, floodplains, or coastal storm surge areas usually face higher rates, limited carriers, or special policy requirements.

  1. Can a buyer use their existing insurance company for the new home?

Often yes, but it depends on the company’s underwriting guidelines for the property location and risk factors. Buyers should still compare quotes.

  1. What types of coverage should be considered beyond standard homeowners insurance?

This may include flood insurance, earthquake insurance, or special endorsements for high-value items. Standard policies don’t cover all risks.

  1. Should buyers review past insurance claims on the property?

Yes. A C.L.U.E. (Comprehensive Loss Underwriting Exchange) report can show claim history, which can affect insurability and premiums.

  1. Can the seller’s current insurance be transferred to the buyer?

Usually no, but the seller’s policy information can provide a starting point for the buyer’s insurance search.

  1. What happens if insurance can’t be obtained before closing?

The transaction could be delayed or cancelled unless the buyer can find alternative coverage, sometimes through a state-assigned “FAIR Plan” or specialty insurer.

  1. Are there inspection-related issues that might affect insurance?

Yes. Roof condition, electrical wiring, plumbing, and heating systems can impact coverage availability and rates. Some insurers require upgrades before issuing a policy.

  1. Does the buyer’s credit score affect insurance rates?

In many states, including California, insurers can consider certain credit-based insurance scores when determining premium

 

Disclaimer:
The questions and answers provided are for general guidance only and may not cover all details or apply to every situation. If anything is unclear or you need further clarification, please visit car.org for official resources and the most up-to-date information from the California Association of REALTORS®.

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